Toronto: APPrO President Dave Butters has put forward a series of recommendations on how to tackle several of the most serious policy challenges currently facing the Ontario electricity sector.
“Minister Bentley asked for specific and detailed recommendations on the top issues of the day and we were happy to oblige,” Butters said. “Our recommendations focus in on key challenges and will help to reinforce the strength of Ontario’s power sector.”
APPrO representatives met with the Minister and senior staff in February and presented an overview of current generator concerns at that time. As a follow-up to those discussions APPrO enumerated its specific recommendations in three letters to Minister Bentley. The letters focused on Surplus Baseload Generation (SBG), the impact of GA reallocation on NUGs, and Combined Heat and Power (CHP).
“We see realistic options for addressing the SBG situation, NUGs and CHP issues,” Butters said. “However there are some challenges in each case, and we have tried to anticipate and deal with them in our recommendations.”
In terms of managing SBG, APPrO’s recommendations suggest making a priority of facilitating exports, taking steps to improve the accuracy of price signals, and varying the output of baseload generators where appropriate. “These recommendations are all consistent with strengthening the operation of the electricity market in Ontario, and with minimizing long term costs for consumers,” Butters noted.
With respect to Non-Utility Generation (NUG) contracts, APPrO reiterated a widely accepted principle that parties to these contracts should be kept whole if and when changes designed to achieve public policy objectives are made to the system. Specifically APPrO recommended the use of AQEW, or Average Quantity of Energy Withdrawn, in certain calculations for determining generator revenue. In its recommendations on SBG, APPrO also pointed out that NUGs can be incented to provide SBG management services under their existing contracts.
APPrO pointed out that, considering its beneficial characteristics, CHP is one of the most cost-effective resources available to the system. APPrO’s recommendations on CHP included the following:
• Ask the OPA to fulfill the 1000 MW mandate of the most recent CHP directive as quickly as possible.
• Establish a permanent program for procurement of CHP capacity.
• Emphasize the use of bilateral negotiation rather than RFPs.
• Clarify the rules that govern access to distribution connections, so that CHP is not universally shut out in favour of renewables.
Some of the specific recommendations on SBG included the following:
1. Empower the IESO to use the most dynamically flexible resources available to manage SBG.
2. Ensure that any supply resource that is reduced as a result of SBG management is “held whole” with respect to lost profits for foregone operations. “There is a demonstrable net benefit to ratepayers from such actions,” APPrO stressed.
3. Initiate discussions with NUGs on provision of SBG management services, with appropriate compensation of course.
4. Reduce or eliminate barriers to trade such as export tariffs, at least until SBG is not an issue.
For more information on these recommendations, please contact APPrO.